Fund transfer to buy digital goods

Hi,
If I have an Indian company which wishes to buy digital goods from overseas then resell them in India-
1-What taxes are payable
2- Is there a limit to the funds hat can be sent out to pay for the goods? how do you demonstrate the purpose?

Asked 1 year ago in Corporate Tax from Australia

Dear sir,
If you are an australia based company and selling goods to india, in india only custom duty on import shall be applicable. also at the time of local sales in india local sales tax shall be applicable and income earned by your counter part in india, income tax shall be payable.
There is no limit for remittance of fund subject to real movement of fund take place and all necessary documents submitted to bank in time. also an Import Export Code required to be taken by indian counterpart on such trasanction.

Thanks for that- i will refine my question
I want to set up am Indian Subsidiary company-
My Indian company will buy bitcoin (digital) from overseas suppliers then sell the bitcoin in India.
After the sales in India we will once again have to purchase bitcoin overseas. Is this possible to demonstrate the real movement of funds?

Asked 1 year ago

Dear Sir,
First of all Bitcoin is not officially accepted by the Reserve Bank of India as per their latest guidelines.
So you can set up a subsidiary indian company who buy from overseas company and can sell bitcoin in india. Bitcoin being digital currency does not attract any indirect tax. However income tax shall be payable on the said income at full rate applicable i.e. 33.99%.
The fund movement can be done through any online payment mode like paypal or international bank account.

So the profit on transaction is the net result of - cost to buy the bitcoin and what we sell it for?
When sending funds from India via local bank account to buy bitcoin, what documents are needed and how long does the process take for approvals to conduct transaction?

Asked 1 year ago

Yes Profit will be accordingly only.
You need to check legality of the same, as per my understanding payment for purchase of bitcoin through official banking channel is not allowed. Still you can confirm with your indian bank.

Dear sir,
You have to take export & import license and pay custom duty on import. Further,local sales in India will attract local VAT and profit earned during the year by the Company will attract income tax.
Thanks and Regards
Abhishek Dugar
CA CS B.Com

can you define what outside service means?
can I purchase from a supplier based in Hong Kong and there is no import?

Asked 1 year ago

Sir for service it is very specific terms prescribed with respect to each type of services and there are 14 rules prescribed to determine their taxability. However in general parlance outside service means when service provide is out of india and service receiver is in india service tax is payable be recipient of services based in india.
You can purchase from any supplier outside india irrespective of country.

Ok to clarify-
My wholly owned subsidiary Indian company buys 10 bitcoin from its parent company in Hong kong for xxx rs. Is there any import duties to be paid on the purchase of the bitcoins. They have been bought at fair market international price.

Hello Sir,
Firstly is it legal to deal in Bitcoins in India. As far as I know it is illegal as per RBI policies and people deal with it in the grey market.
Because if its illegal then the income earned will also be illegal.
No Service Tax/ Vat is applicable though.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP

Dear Sir,
I assume the point you are trying to make here is that buying and selling of bitcoin is legal. If that is the case then Income Tax @ 30% plus cess shall be payable by you.
Also take a note that the transaction should be an arms length transaction as the IT department may look into it to make sure that you are not avoiding taxes in India.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP

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